PepsiCo taps Indian cricket tie-up

25 March 2013

MUMBAI: PepsiCo, the drinks and snacks firm, believes its sponsorship of the Indian Premier League (IPL) cricket competition, the sixth instalment of which starts next month, will pay significant dividends.

A company spokesperson told the Financial Times: "We are confident that we will be able to derive tremendous value from Pepsi IPL, which will be multiple times our investment."

PepsiCo is paying $73.7m to sponsor the league for the next five seasons and anticipates its Pepsi brand of cola will increase sales during a period that traditionally accounts for around half of consumption of cold drinks.

"The timing of the tournament is ideal as it gives us a powerful platform to activate our brands at retail in ways that drive sales," said the spokesperson.

While PepsiCo's title sponsorship is twice what was paid for the first five years of the league, the ad rates for associate sponsors being charged by Multi Screen Media (MSM), which owns the broadcasting rights, have dropped 10%-12% from last year.

"By correcting ad rates, we have gained in terms of ad volume, which is up 20%-25% this year," Rohit Gupta, MSM president of network sales, licensing and telephony, told the Business Standard.

"Not only are old clients such as Godrej and Samsung back as sponsors, we have also got new players such as Panasonic and Usha on board."

Estimates suggest MSM will generate a 29% increase in ad revenues as a result of its new pricing strategy.

The popularity of cricket in India is such that brands regard it as an essential event to be involved with, even though TV viewer ratings have dipped over the years, from 4.8 in 2008 to 3.5 in 2012.

In all, over 200 advertisers with 300-plus brands will be involved in IPL 6, a 40% increase on the first edition.

"There are brands also not on the IPL which have done successful campaigns in this period," said Navin Khemka, managing partner at ZenithOptimedia India. "So to be or not to be is a call that all brands must take individually keeping their own objectives in mind."